A new executive order from President Donald Trump has stipulated that all federal payments and disbursements are to be made using digital payment systems going forward in an attempt to curb any potential for fraud whilst also increasing efficiency.
Social Security beneficiaries, for the most part, do already receive their monthly benefit payments by means of digital payment sources, however, there still remains a significant number of vulnerable individuals who receive their monthly benefit income in the form of a mailed paper check. As such, the Social Security Administration (SSA) is now warning the cohort of beneficiaries who still receive their benefits as a paper check that their upcoming payments may face some disruptions once the executive order comes into full effect. Here is what you need to know.
Federal payments go digital impacting Social Security recipients
According to a March 25th executive order titled, “Modernizing Payments To and From America’s Bank Account”, the use of paper based payment systems by the Federal Government will be phased out and as of September 30th, 2025, all payments and disbursements will be made using electronic payment systems. The executive order states that the use of paper based payments “imposes unnecessary costs; delays; and risks of fraud, lost payments, theft, and inefficiencies.” Additionally, “mail theft complaints have increased substantially since the COVID-19 pandemic.” Attempts to shift all federal payments to a digital mode have been made since 2011.
In the case of Social Security beneficiaries, around 99% of recipients have already opted to receive their monthly benefits electronically, however, the remaining one percent of beneficiaries amounts to around half a million individuals. The order does, however, state that exceptions will be made in special cases, and as such, beneficiaries who want to continue receiving paper checks will be required to submit a waiver request to the Treasury Department.
“The policy could cause a flood of people coming to the agency with questions about missing checks, if some of the 521,644 people receiving such paper payments don’t file for a waiver before the end of September,” said one SSA employee, who was not authorized to speak on the record, as per Nextgov/FCW. Furthermore, an SSA internal policy document from July 2 does note that if the waiver if not granted by September 30th or is still pending, then the recipient “may experience a disruption in timely payment delivery.”
Impact on vulnerable groups
Many Social Security beneficiaries are older or not familiar with digital banking systems, are unbanked, or may not have access to the internet. According to the Federal Reserve, “six percent of American adults were unbanked in 2023, and that rate is higher among low-income adults, as well as younger people, Black and Hispanic adults, and people with disabilities.”
Additionally, there exists many rural and tribal communities who do not have internet access or are situated a considerable distance from any bank branches and as such, a change of this scale will likely have a significant impact on the residents of these communities.
“It is no exaggeration to state that the majority of our citizens receive critical payments by check,” the Coalition of Large Tribes — the representative of over 50 tribes with large land bases — wrote last month in a comment to the Treasury.
“This transition presents significant challenges for Tribal communities,” the Coalition further noted, referring to the “limited banking infrastructure and inadequate broadband access within Indian Country.”
The president of advocacy group Social Security Works, Nancy Altman said to Nextgov/FCW that, “there are serious implementation questions, especially given all the problems they’re having at SSA.”
Additionally, according to the SSA employee who spoke to Nextgov/FCW, “the push to digital payments could especially slow processing for claims submitted online.”
“We don’t have the personnel to call everyone, so most people will find out by letter,” the SSA employee added. “There is no doubt this will cause delays to a lot of people.”
As such, claims that do not contain direct deposit information are being held for 30 days as per the directive given to SSA employees. During this time, the recipient will be contacted via telephone and letter regarding direct deposit requirements. Following this, the benefit will be sent via check if the recipient does not contact the agency.